DONALD TRUMP AND ROBERT KIYOSAKI: FINANCIAL EDUCATION- FUNDAMENTALS RULES FOR INVESTORS

Summary

The speaker from the video script emphasizes the importance of financial education and literacy, stressing that while real estate can be a powerful investment vehicle, it requires smart and careful management, especially when using debt. They argue against the common belief that a house is always an asset, pointing out that it can become a liability if one cannot make the payments. The speaker also criticizes the advice to 'live below your means,' suggesting it can be demotivating and counterproductive. Instead, they advocate for expanding one's means through financial knowledge and growth. They share personal anecdotes about striving for improvement and the mindset of success, highlighting the psychological benefits of aiming high, even when it seems out of reach. The summary concludes by stressing that financial IQ is crucial in distinguishing between good and bad investments across various asset classes, including stocks, real estate, and commodities.

Takeaways

• 🏠 **Housing as an Asset or Liability**: The speaker emphasizes that a house is not always an asset and can become a significant liability if one cannot make payments.
• 💰 **Debt as a Double-Edged Sword**: Debt can be used to get richer, but it requires financial intelligence to manage it wisely and avoid financial ruin.
• 🧠 **Importance of Financial Education**: The necessity of being financially educated to distinguish between good and bad investments and to use debt effectively is highlighted.
• 🚫 **Against 'Live Below Your Means'**: The speaker argues against the idea of living below one's means, comparing it to a starvation diet, which is not sustainable or healthy.
• 📚 **Reading and Learning**: Stressing the value of reading books and educating oneself to expand one's means without falling into excessive debt.
• 🛫 **Aspirational Thinking**: The story of someone always flying first class to maintain a positive mindset and aspire for success, despite not having the means at the time.
• 🤔 **Self-Improvement Over Materialism**: The speaker values self-improvement and intelligence over material possessions, stating that wanting to do better is what truly brings happiness.
• 💼 **Smart Real Estate Investment**: A love for real estate is expressed, but with a caution that it must be approached with intelligence and an understanding of its risks.
• 🤝 **Collaboration for Success**: The importance of coming together to learn from each other and improve one's financial IQ is mentioned.
• 📉 **Risks of Uninformed Investing**: The dangers of investing without understanding the market or the specific investment, leading to significant financial losses.
• 🏆 **Achievement and Contentment**: The message that achieving financial success allows for contentment with less, as the speaker chose to keep valuable real estate units rather than sell them.

Q & A

What did the author of 'Rich Dad Poor Dad' say about houses being assets?

The author stated that houses are not assets, which was a controversial belief at the time, as many people consider their homes as assets. He explained that when one cannot make house payments, it becomes the biggest liability one has.

Why did the author compare real estate to a loaded gun?

The author compared real estate to a loaded gun because, like a gun, it can be used to protect oneself (get richer) or harm oneself (get wiped out financially). It emphasizes the double-edged nature of using debt in real estate investments.

What is the author's opinion on the phrase 'live below your means'?

The author does not like the phrase 'live below your means', as he believes it can be demotivating and detrimental to one's spirit. Instead, he advocates for financial education and expanding one's means responsibly.

Why did the author's friend always fly first class, even when he was not financially stable?

The author's friend flew first class to maintain a positive mental state and to think of himself as successful, which was a motivational strategy that ultimately led to his success.

What does the author suggest is more important than living below one's means?

The author suggests that striving for improvement, getting smarter, and doing better every day is more important than simply living below one's means. He believes that financial education and making informed investment decisions are key to achieving this.

What is the author's view on the role of financial education?

The author views financial education as crucial. It empowers individuals to distinguish between good and bad investments, and to make informed decisions that can lead to financial success rather than being misled by common misconceptions.

Why did the author decide to keep some units in a building he built instead of selling them?

The author decided to keep some units because he did not need the immediate financial gain from selling them. Over time, these units became very valuable, illustrating a long-term investment strategy.

What is the author's perspective on the importance of financial IQ?

The author believes that financial IQ is paramount. It enables individuals to understand the value of investments and to differentiate between good and bad advice, which is essential for financial success.

What did the author mean when he said that 'real estate can be a bad investment'?

The author meant that without proper knowledge and financial education, even investments traditionally seen as safe, like real estate, can lead to financial loss. It underscores the importance of being 'smart' with investments.

How does the author feel about the tragedy of hardworking, conservative investors losing significant net worth?

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What is the author's advice for those who want to improve their financial situation?

The author advises individuals to seek financial education to increase their financial IQ, make informed investment decisions, and to aim for continuous improvement and growth in their financial means.

Outlines

00:00

🏠 Real Estate: Asset or Liability?

The speaker from 'Rich Dad Poor Dad' challenges the common belief that a house is an asset, explaining that it can become a liability if one cannot make the payments. They emphasize the importance of being smart with real estate investments, as they can be both beneficial and dangerous due to the use of debt. The speaker advocates for financial education to discern between good and bad investments and advises against simply advising people to get out of debt without understanding the role of debt in wealth building. They also criticize the advice to 'live below your means,' suggesting that it can be demotivating and instead promote personal growth and financial literacy.

05:02

💼 Financial Education and Investment Wisdom

The speaker discusses the importance of financial education, highlighting that without it, people can make poor investment decisions and suffer significant financial losses, as seen with hardworking and conservative investors who lost half their net worth in a year. They stress that financial IQ is crucial in distinguishing between good and bad investments and advice. The speaker also shares personal anecdotes about the psychological benefits of aiming high and the importance of feeling good about oneself to strive for improvement. They conclude by reiterating the complexity of financial decisions and the necessity of financial literacy to make informed choices in various investment avenues, including gold, real estate, stocks, and oil.

Keywords

💡Asset

An asset is a resource with economic value that an individual or corporation owns or controls with the expectation that it will provide future benefit. In the context of the video, the speaker challenges the common belief that a house is always an asset, explaining that if one cannot make house payments, it becomes a liability instead.

💡Liability

A liability is a legal financial debt or obligation that arises during the course of business operations. The video emphasizes that a house can be a liability when it leads to financial strain, such as being unable to make mortgage payments.

💡Real Estate

Real estate refers to land and anything permanently attached to it, including buildings and other structures. It is a major theme in the video, where the speaker expresses a love for real estate as an investment but cautions that it must be handled wisely due to its potential risks.

💡Debt

Debt is an amount of money borrowed by one party from another, with an agreement to pay it back with interest. The video discusses debt as a 'two-edged sword' that can either enrich or impoverish an individual, depending on how it's managed.

💡Financial Education

Financial education is the knowledge and skills required to understand and manage personal finances. The speaker advocates for financial education as a means to expand one's means without falling into excessive debt, emphasizing its importance in discerning good from bad investment advice.

💡Live Below Your Means

This phrase suggests that one should spend less money than they earn. The video criticizes this approach, arguing that it can be demoralizing and that financial education is a better path to prosperity and personal growth.

💡Mutual Funds

Mutual funds are investment vehicles consisting of a portfolio of stocks, bonds, or other securities, managed by a professional money manager. The video mentions mutual funds as an example of an investment that requires discernment to understand whether it's a good or bad investment.

💡Stocks

Stocks represent ownership shares in a corporation and the right to an portion of its assets and earnings. The video discusses the risks associated with stock investments, noting that even conservative stocks can lose significant value.

💡Financial IQ

Financial IQ refers to one's level of financial literacy and knowledge. The speaker stresses that a high financial IQ is crucial for distinguishing between good and bad investments, which is central to the video's message on personal finance.

💡Investment

An investment is an asset or item acquired with the goal of generating income or appreciation in its value. The video explores various types of investments, including real estate, stocks, and gold, and the importance of making informed decisions when investing.

💡Success

Success is the accomplishment of an aim or purpose. In the context of the video, success is tied to financial education and smart investment choices. The speaker shares personal anecdotes and the story of a friend to illustrate how mindset and confidence can contribute to success.

Highlights

Author of 'Rich Dad Poor Dad' stated in 1997 that a house is not an asset, which was a controversial belief at the time.

A house can become the biggest liability if one cannot make the payments.

Real estate is considered the best investment vehicle if handled smartly.

Debt is a two-edged sword that can be used to get richer or wipe one out.

Financial education is crucial for understanding how to use debt effectively.

Advising to 'live below your means' can be demotivating and detrimental to one's spirit.

The author prefers to expand one's means through financial education rather than restricting lifestyle.

A friend's habit of always flying first class, despite limited means, was a mental strategy that contributed to his success.

The author emphasizes the importance of self-improvement and striving for better every day.

Success is not just about material possessions but about the desire to get better and smarter.

The author kept units in a building he built instead of selling them, which turned out to be a valuable decision.

Achieving financial success allows for the option to enjoy luxuries without needing them.

Financial education is essential to distinguish between good and bad investments.

The author witnessed hardworking, conservative investors losing significant net worth due to stock market fluctuations.

Investing in various assets like gold, real estate, stocks, or oil carries both risks and opportunities for profit.

Financial IQ is key to making valuable investments and avoiding bad advice.

Transcripts

you

well in Rich Dad Poor Dad I came out in

1997 I said your house is not an asset

and it drove people nuts is this one

crazy on me because that's a common

belief but when when you can't make your

house payments you find out is the

biggest liability you've got and what

may that's - you have to be very much

more correct than you even thought right

when you look at what's happened to home

prices and Donald and I love real estate

I love with us I think it's the best

thing going better than sliced bread but

if you're not smart with it it's like a

loaded gun you know you can protect

yourself we can kill yourself with it so

real estate is to me the best vehicle

but you've got to be smart with it

because we're using debt and debt is a

two-edged sword out there so you use

debt I used it but the more debt you use

actually you have to be smarter so you

can use debt to get richer it can also

use debt to wipe you out so that's why

you know I continue on saying we need

financial education to just say to

somebody get out of debt well that's not

accurate

you use debt don't you that is a great

thing and to be big and to be very

successful debt is a very useful weapon

way but you have to be very careful is

correct so the other thing when people

say live below your means you don't like

to live below your means do you know and

I think when you say to somebody live

below your means you wipe the spirit out

it's like saying somebody if you want to

lose weight go on a starvation diet it

doesn't make you healthier to starve

yourself so I would rather get

financially educated that's why I read

read your books because I want to this

is my greatest asset I want to feed my

brain so that I can expand my means

without getting into excessive debt or

where I start to lose because debt this

a is a to a sort but telling somebody to

live below your means is almost inhumane

I never felt good doing it I wanted to

strive to

you better every day I want to do better

everyday I liked a good life like I tell

the story of taxiing underneath your jet

and I thought I was in my jet but it was

a little Learjet I look up and there's a

727 a night taxi under it as a holy man

you know it's it's big boys and their

toys but nonetheless it inspired me I

said okay I'm in a Learjet now it's time

to step up and it doesn't mean the jet

will make me happier what makes me

happier is the wanting to get better to

get smarter to do better well I have a

friend who was not successful at all but

was really up-and-coming and he had a

thing he would only fly first class I'm

not saying do this because for somebody

who won't work but he needed that

mentally right he wanted to fly first

class because mentally he wanted to

think he was the best and that's it and

even though he didn't have much money at

the time this is years ago he would

always fly used to criticize him but it

put him in a good state of mind and he

became a very very successful guy very

very successful and I oh I've always

remembered that he would never fly coach

he would always like first last even

though I didn't have the means to fly so

look it's complicated but whatever it

takes to train that whatever it makes

you feel better about yourself stronger

more confident to want to do better and

I think really that's the issue and then

we're at the stage of our lives right

now we you know to ask for more is not

really it but to do better to feel

better about ourselves is still

important it is very important so that's

why I don't like saying live below your

means and scrimp and all that because

you know shopping is fun

nice nice houses are fun at the same

time you have to be very careful yes but

ethically responsible correct like you

know when when you invited us up to your

your little con your little duplex up

whatever he call it we walked up there

I've never seen a two-story two entire

floor home in New York City and my wife

Kim's as you know this I never thought I

never really not live in a condo but

just as mr. Trump's house will do and it

is spectacular you don't I mean it's and

I don't need that right yes I don't I

don't need that if I had one nice

bedroom with a good television set in a

nice bed and you don't really need that

but it was in a building I built right

and it was there for the taking so I

figured I might as well do it and what

have I done instead of selling the

equivalent of 12 or 13 units I kept them

and by keeping them I have them I didn't

sell them and that's okay and it's

become you know a very valuable place so

I didn't need that I don't need it now

but there's something nice about it

right and that's my message is achieve

it and then you can take it or leave it

but if you don't achieve it then it's

always something away from you so again

that's why be redundant about this

living below your means I don't think

that makes your spirit happy it kills

your spirit also if you don't have the

financial education when somebody says

your house is an asset or these mutual

funds are good or the stock will go up

and you don't know the dirty and good

investment and a bad investment because

real estate can be a bad investment

stocks can be a bad investment if you

don't know a good investment advice from

bad investment advice then you're going

to take it this world is not kind should

we say the hardest thing that I've

witnessed over the last year is seeing

people that were very hardworking and

very conservative that invested in the

stocks and I'm not talking about

high-flying stocks I'm talking about

very solid companies and their net worth

is 50% of what it was a year ago and I

haven't done anything wrong

right now they put their money in stock

so I guess you could say that's wrong

but it's really not wrong though because

historically that's been okay so they

went into conservative stocks

and a year later they're worth 50% and

all they've done is worked and that's

the hardest thing I've seen as tragedy

the thing that I want to say is this you

can invest in gold and lose money you

can invest in real estate and lose money

you can lose the stocks and lose money

you can invest in oil and lose money you

can also make a lot of money all those

things so really the reason we get

together is because your financial

intelligence your financial IQ makes

something valuable or not value like I

said you have to know a good investment

from a bad investment

good advice from bad advice